Financial Crime World

MONACO: Government Proposes Sweeping Changes to Banking Industry Compliance Standards

Proposed Overhaul of Banking Industry Compliance Standards in Monaco

The National Council in Monaco has been presented with a bill aimed at overhauling the country’s banking industry compliance standards. This proposal, if adopted, could have significant implications for financial institutions operating in the principality.

Strengthening Regulatory Powers

According to sources close to the matter, the bill seeks to strengthen the powers of the Comité de Contrôle des Activités Financières (CCAF), Monaco’s regulatory body responsible for overseeing the financial sector. This move is particularly timely as the CCAF prepares to join the International Organization of Securities Commissions (IOSCO) as an ordinary member.

Key Provisions of the Bill

  • Modification Requirements: Banks will be required to submit modifications to their license applications, including changes to shareholding, activities programs, and delegations, for prior authorization from the CCAF.
  • Removal of Exemptions: The bill seeks to remove certain exemptions currently enjoyed by banks under Article 32 of Law No. 1.338, which would require financial institutions to disclose financial documentation intended for clients and the public in advance to the CCAF.
  • Abolition of Canvassing Exemption: The exemption on canvassing, or offering financial products or services to non-professional individuals, is set to be abolished.

Investor Protection Measures

The bill proposes new rules aimed at improving investor protection, including:

  • Written Procedures for Managing Conflicts of Interest
  • Prior Information Requirements for Clients when Risks Cannot be Avoided

Registration and Data Protection Obligations

All services and transactions will need to be registered and comply with data protection rules. This new obligation is seen as a necessary step to improve supervision by the CCAF.

Market Offenses Reforms

Market offenses are also set to be reformed under the proposed changes, although details on these reforms remain scarce at this stage.

Timeline and Impact

The bill has been undergoing review by the Commission since October 6 and could potentially be adopted before the end of the year. If passed, it is likely to have a significant impact on the banking industry in Monaco, providing much-needed clarity and regulatory certainty for financial institutions operating in the principality.